Ask 10 friends today if they carry cash or rely solely on debit or credit cards. The majority will likely say they don’t have any cash on them, as more people are turning to plastic to pay their bills, make purchases, and more. In fact, 83 percent of individuals between the ages of 30 and 49 states they use a credit card, while 65 percent of those between the ages of 18 and 29 have at least one card of this type. When a person reaches the age of 50 this number begins to decline. Seventy-eight percent of individuals between the ages of 50 and 69 have a minimum of one credit card. However, even with a large majority of the population using these cards, there are numerous things they still don’t understand. Following are five important facts everyone should know about credit cards.
The First Credit Card
When credit cards first became available, users were limited to making purchases at one store. It wasn’t until 1950 that the first card permitted to be used at multiple locations was introduced. Frank McNamara of Hamilton Credit Corporation introduced the Diners’ Club Card. This card could be used at 28 restaurants and two hotels, and more than 10,000 people were using it within one year of its launch.
Interest Rates Have Been Rising
Cardholders in America paid approximately $104 billion interest and fees on their credit cards in 2018. This was an 11 percent increase over the prior year and a 35 percent increase over the past five years. As multiple interest rate hikes are expected in the coming months, this figure is only going to rise.
Unauthorized Credit Card Use
Credit cardholders cannot be held responsible for unauthorized use of their credit card. Under the Fair Credit Billing Act, the consumer is only responsible for paying the first $50 of these charges. In addition, if the card has been reported lost or stolen and charges are made to the card after this reporting, the consumer does not have to pay anything.
Payment Upon Cancellation of a Credit Card
Credit card companies reserve the right to raise interest rates. However, cardholders may decline to pay this rate and have the right to do so. When this happens, the company often lowers the credit limit, increases the monthly payment due, or cancels the credit card. In the event the card is cancelled, the cardholder has five years or more to pay the balance under the Credit Card Accountability and Disclosure Act.
Credit Card Defaults
Credit card defaults are on the rise, and every consumer needs to be aware of this. Honest individuals don’t take out credit cards with no intention of paying them, but things happen in life that may prevent them from doing so. According to the Federal Reserve, as of August 2018, credit card defaults had risen to 3.65 percent. It appears many of these people were not aware of hardship credit card programs or didn’t have anyone explaining credit card programs to them.
People need to use credit wisely. Unfortunately, even those who do take out credit may find a change in their life leaves them unable to pay their bills. The more a person knows, the less likely this is to happen. If it does, don’t hesitate to contact the lender for assistance. They may be able to help you resolve your issue or provide information on options available to you. It never hurts to ask.